TFM Sunrise Update 03-16-2022


Corn futures were mostly lower overnight in lighter trade volume.  May corn traded a 10 cent consolidation range between 7.47 and 7.57, and is down 9 cents to 7.49 this morning.  December corn is down 3-1/2 cents to 6.47-3/4 while hanging around the 6.50 price area this week.  The market is propped up by all the uncertainty that lies ahead in 2022.  For now, all eyes are on what corn gets planted in Ukraine.  Many estimates call for a 30% to 40% decline in planted acreage.  Though not a major global corn grower, the nation exports an estimated 80% of their corn corp.  Meanwhile, Brazil has more than 90% of its second crop corn planted and off to a generally favorable start.  Weekly Ethanol Stats will be out today, Exports tomorrow.  In outside markets, the dollar is down (50 basis points), crude is unchanged after its sharp downward reversal; And, stock index futures are up 380 points.


The soy complex was mixed last night with a higher bias.  May beans are up 12 cents to 16.70-3/4 this morning.  Nov is up 8 cents to 14.75.  May meal is up 2.80 to 486.80 while bumping up against contract high resistance as reports of a COVID surge in China mixed with rising bird flu cases challenge the demand optimism and have protein prices looking expensive.  On top of that, the world’s largest soy exporter Argentina has reportedly halted registration of export sales in soy oil and meal, a highly criticized move as the country nears its harvest period.  May soyoil is up .88 to 74.56.  Yesterday’s February soybean crush was the lowest in five months, however, at 165.057 million bushels in February.  On Tuesday, Managed funds were net sellers of 7,000 soybeans, 1,000 soymeal and 1,000 soyoil, shrinking their net long positions to 159,000 soybeans, 100,000 soymeal and 78,000 soyoil.  Overnight, Chinese May bean futures were up 21 yuan; Soymeal down 49; Soyoil up 32; Palm oil up 110; Corn down 4.  Malaysian palm oil prices overnight were up 181 ringgit (+2.95%) at 6313.

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Wheat futures are down this morning as sea-saw action continues to keep prices active.  Double-digit losses were posted overnight with the May Chicago down 30 cents to 11.24-1/2, May KC down 27 cents to 11.30; And, May MPLS wheat down 10-1/2 cents to 10.99-3/4.  The May Chicago wheat contract dropped more than a dollar last week but has gained almost half of that back this week with strong trade Tuesday.  The initial rally higher was obviously overdone, and the market was due for a setback as prices ran up too high too quickly.  The Ukrainian supply concerns are not going away in the near future, but last week’s USDA report was good reminder that overall world stocks are at pretty comfortable levels.  Russia did report that they are looking at possibly suspending grain exports until the end of June, raising concerns of a global food shortage.  This market is going to remain volatile, but there is a chance the blow off top from last week will be a notable peak for the market.


Cattle futures are called steady to higher amid cash market optimism and strong retail values.  April cattle pushed back above the 200-day moving average on the close, turning charts more positive on the technical side, signaling the market having likely put in a near-term low.  The price action into the close, finishing at the top of the range will likely leave additional buying support for today, with the next resistance at the $142 area over the April contract.  Cash trade is still slow to develop this week, but the market remains optimistic.  Asking prices were $142, hoping to catch a higher bid, which were undefined.  A firmer cash tone will be key to support prices going into the second half of the week.  Warmer weather may start boosting spring demand for beef retail values.  The retail market was mixed on Tuesday’s close, (Choice: +2.39 to 257.90, Select: -1.10 to 248.84) with demand light at 135 midday loads. The Choice/Select spread is beginning to widen at 9.06 at the close on Tuesday, supported by improving Choice beef demand.  It is encouraging to see Feeder prices hold in against a surge higher in wheat prices and a firming corn market throughout the day.  The Feeder Cattle Cash Index was 0.50 lower to 152.81, and with the discount to futures, that premium limited the gains in the front month contracts.  Beef markets still look undervalued, it will be up to the cash market and money flow to maintain the strength in the near-term.


Hogs are called mixed to higher.  Futures were choppy again on Tuesday as the summer months led the market higher.  A firmer cash tone supported the April futures at the contract stayed range bound between the 10-day and 40-day moving averages.  Prices are consolidating and looking for a break out.  June closed back above the $120 level, opening the door for a retest of the recent contract high.  The Lean Hog Cash Index was 0.09 higher to 100.85, posting its highest close since August and holding above 100 point level.  The April futures are trading at a 1.550 premium to the index, and that could limit gains.  Pork cutout values were sharply higher at midday, supporting the futures market.  Cutouts were 5.71 higher at midday, and still held gains into the close, finishing 1.29 higher to 104.48, with a moderate/strong load count at 375 loads.  The uptick in load numbers is encouraging as a sign that product is moving at these prices.  The tighter supply picture, and strength in retails values have helped support the cash markets.


Matthew Strelow

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